ART Advanced Research Technologies Inc. ("ART") (TSX: ARA), a
Canadian medical device company and a leader in optical molecular
imaging products for the healthcare and pharmaceutical industries,
announces its financial results for the fourth quarter and year
ended December 31, 2008. ART reported revenues of $1,145,682 for
the fourth quarter of 2008, compared to $1,384,014 for the same
quarter of 2007. Revenues for the year ended December 31, 2008
increased by 137% to $4,954,828, compared to $2,087,920 for the
year ended December 31, 2007. For the 2008 fourth quarter, the
operating loss decreased by $331,346, or 19%, to $1,374,940 from
$1,706,286 for the same period a year ago. As for the year ended
December 31, 2008, the operating loss decreased by $3,746,797, or
40%, to $5,525,706 from $9,272,503 for the same period ended in
2007. ART incurred a net loss of $892,615 or $0.01 per share for
the three-month period ended December 31, 2008, compared to a net
loss of $1,683,593 or $0.02 per share for the three-month period
ended December 31, 2007. The net loss for the year ended December
31, 2008, was $4,819,230 or $0.05 per share, compared to $8,623,447
or $0.13 per share for the year ended December 31, 2007. All dollar
amounts referenced herein are in U.S. dollars, unless otherwise
stated.
2008 Fourth Quarter Highlights
- Final scans using the SoftScan� device were completed for the
treatment monitoring study at the Sunnybrook Health Sciences Centre
in Toronto and, given how significant these results are, the team
at Sunnybrook will be submitting them for publication in a
peer-reviewed journal.
- An experimental probe being tested using the SoftScan device
at Stanford University, displayed a high optical contrast ratio
which means they could eventually be used for clinical applications
in breast cancer diagnosis.
- ART added an additional three units to the worldwide installed
base of Optix� systems, now standing at close to 60 units.
Post Quarter Event
- In January 2009, ART further reduced expenses and streamlined
the Company, in response to the deteriorating global economic
climate.
Revenues
For the three-month period ended December 31, 2008, revenues
were $1,145,682, compared to $1,384,014 for the same quarter a year
ago. For the year ended December 31, 2008, sales increased by 137%
to $4,954,828, compared to $2,087,920 for the year ended December
31, 2007. The decrease in sales during the fourth quarter of 2008
compared to 2007 is mainly due to the fact that the Company had
sold one more unit in the fourth quarter of 2007 compared to 2008.
The increase in product sales in 2008 when compared to 2007 is
explained by the Company's transition, for its Optix product, from
an exclusive distribution model to a direct sale model. By electing
this new strategy, the Company was able to expand its revenue model
by offering a wider range of services and a source of recurring
revenue while providing higher gross margins per system sold.
During the year ended December 31, 2008, ART sold the first
SoftScan unit, eight Optix units, and add-ons for Optix systems.
Also, the Company recognized revenues totaling $1,075,517 from
services rendered primarily in past years on behalf of GE
Healthcare ("GE"), as ART is completing the transition out of the
Optix distribution agreement with GE. During the year ended
December 31, 2007, sales resulting from services were not
significant.
Gross Margin
During the three-month period ended December 31, 2008, ART
generated a total gross margin of $662,940 or 62% from the sale of
its products, compared to $757,287 or 56% for the same quarter of
2007. The gross margin generated on the sales of services and other
revenues was $64,668 or 77% for the three-month period ended
December 31, 2008, compared to $10,590 or 43% for the same quarter
in 2007. During the year ended December 31, 2008, ART generated a
gross margin of $2,203,185 or 62% from the sales of its products,
compared to $1,147,880 or 56% for the year ended December 31, 2007.
The gross margin generated on the sales of services and other
revenues was $1,340,838 or 94% for the year ended December 31,
2008, compared to $10,590 or 43% for the year ended December 31,
2007. The increase of the product gross margin ratio for the
three-month period ended December 31, 2008, compared to the same
quarter of the previous year, is primarily due to a different sales
product mix whereas the Company sold more of the Fenestra� product.
The increase in the product gross margin during the year ended
December 31, 2008, compared to the year ended December 31, 2007,
mainly resulted from the implementation of a direct sales force, as
well as the sale of a SoftScan unit in the first quarter of 2008,
where the gross margin on this unit represented almost 100% of the
sale, given that this unit was sold as a prototype and therefore
expensed as incurred in previous years. The gross margin of 94% on
the sales of services and other revenues includes the amounts
invoiced to the previous distributor as the majority of the costs
associated to these services were incurred in previous years.
Operating Expenses
The Company's research and development ("R&D") expenditures
for the three-month period ended December 31, 2008, net of
investment tax credits, amounted to $594,040, compared to $734,287
for the same period ended December 31, 2007. For the year ended
December 31, 2008, R&D expenditures, net of investment tax
credits, were $2,704,682, compared to $4,724,842 for the year ended
December 31, 2007. The R&D expenditures during the three-month
and the twelve-month periods ended December 31, 2008, decreased by
$140,247 or 19% and $2,020,160 or 43% respectively, compared to the
same periods in 2007. The decrease was related to the medical
sector given that the SoftScan product reached important approval
milestones in the first quarter of 2007 by obtaining the CE marking
for Europe. As well, in the preclinical sector, a decrease in
R&D expenses was due to the completion of the research project
leading to the new Optix MX2 system. The costs associated with the
achievement of these milestones, therefore, did not have to be
incurred again in 2008. In 2008, the R&D team continued to
support the Optix system and collaborated with clients for the
development of applications using the new MX2 version of the system
in order to demonstrate the utility of the system in applications
such as oncology, cardiology and neurology.
Selling, general, and administrative ("SG&A") expenses for
the three-month period ended December 31, 2008, totaled $1,261,085,
compared to $1,339,559 for the same period ended December 31, 2007.
SG&A expenses for the year ended December 31, 2008, totalled
$5,536,464, compared to $5,045,825 for the year ended December 31,
2007. The SG&A expenses decreased by $78,474 or 6% during the
three-month period ended December 31, 2008, and increased by
$490,639 or 10% in the year ended December 31, 2008, compared to
the same periods of 2007. The decrease of SG&A expenses in the
fourth quarter of 2008 compared to 2007 was mainly due to the
higher commissions and other direct marketing expenses incurred in
2007. The increase of the SG&A expenses during the year ended
December 31, 2008 was mainly due to the hiring of the new direct
sales force during the first quarter of 2008, the direct marketing
expenses incurred to support the commercialization initiatives, and
the estimated costs expected in relation with the transition out of
the Company's exclusive distribution agreement.
The increase of the amortization in the year ended December 31,
2008, is primarily due to the amortization of patents and of
deferred development.
The operating expenses for the 2008 fourth quarter decreased by
$371,615?or 15% to $2,102,548, from $2,474,163 for the same quarter
a year ago. For the 2008 year-end, the operating expenses decreased
by $1,361,244 or 13% to $9,069,729 from $10,430,973 for the year
ended December 31, 2007. As a result, the operating loss for the
2008 fourth quarter decreased by $331,346 or 19%, to $1,374,940
from $1,706,286 for the same period a year ago. For the 2008
year-end, the operating loss decreased by $3,746,797, or 40%, to
$5,525,706 from $9,272,503 compared to the same period in 2007.
For the fourth quarter of 2008, the financial revenues totalled
$482,326, compared to financial expenses of $22,693 for the same
quarter in 2007. For the year ended December 31, 2008, the Company
realized a net financial revenue of $706,476, compared to a
financial expense of $162,249 in 2007. The increase in the
financial revenues in 2008 compared to 2007 mainly resulted from a
foreign exchange gain, as a result of the trend of the fluctuations
in value of the U.S. dollar against the Canadian dollar.
There were no current income taxes for the quarters ended
December 31, 2008 and 2007, as well as for the year ended December
31, 2008, while there were current income taxes of $811,305
recovered for the year ended December 31, 2007. Income tax recovery
in 2007 resulted from the utilization of tax losses to recover
income taxes on a gain realized on the disposal of an investment in
2006.
Net Loss
The net loss for the three-month period ended December 31, 2008,
was $892,615 or $0.01 per share, compared to $1,683,593 or $0.02
per share for the quarter ended December 31, 2007. The net loss for
the year ended December 31, 2008, was $ 4,819,230 or $ 0.05 per
share, compared to $8,623,447 or $0.13 per share for the year ended
December 31, 2007.
Financial Position
As at December 31, 2008, ART had $3,146,086 in cash and cash
equivalents, and a working capital of $4,479,304, compared to a
cash and cash equivalent of $3,587,654 and a working capital of
$5,119,250 as of December 31, 2007.
The financial statements, accompanying notes to the financial
statements, and Management's Discussion and Analysis for the
three-month period ended December 31, 2008, will be available
online at www.sedar.com, or at www.art.ca, in the "Investors"
section. Summary financial tables are provided below. A detailed
list of the risks and uncertainties affecting the Company can be
found in the Management's Discussion and Analysis for the year
ended December 31, 2008, and in the Company's most recent Annual
Information Form, available on SEDAR at www.sedar.com.
Conference Call
ART will host a conference call today at 5:00 PM (EDT). The
telephone number to access the conference call is (514) 861-1531
when dialing within the Montreal area, or (877) 667-7766 for the
rest of North America. Outside of North America, please dial (514)
861-1531. A replay of the call will be available until April 14,
2009. To listen to the replay from the Montreal area, please dial
(514) 861-2272, or, (800) 408-3053 for the rest of North America.
From outside of North America, please dial (514) 861-2272. The
access code for the replay is 2571417#.
About ART
ART Advanced Research Technologies Inc. is a leader in molecular
imaging products for the healthcare and pharmaceutical industries.
ART has developed products in medical imaging, medical diagnostics,
disease research, and drug discovery with the goal of bringing new
and better treatments to patients faster. The Optix� optical
molecular imaging system, designed for monitoring physiological
changes in living systems at the preclinical study phases of new
drugs, is used by industry and academic leaders worldwide. The
SoftScan� optical medical imaging device is designed to improve the
diagnosis and treatment of breast cancer. Finally, the Fenestra�
line of molecular imaging contrast products provides image
enhancement for a wide range of preclinical Micro CT applications
allowing scientists to see greater detail in their imaging studies,
with potential extension into other major imaging modalities. ART
is commercializing some of these products in a global strategic
alliance with GE Healthcare, a world leader in mammography and
imaging. ART's shares are listed on the TSX under the ticker symbol
ARA. For more information on ART, visit our website at
www.art.ca.
This press release may contain forward-looking statements
subject to risks and uncertainties that would cause actual events
to differ materially from expectations. These risks and
uncertainties are described in the most recent Annual Information
Form and the financial statements for the year ended December 31,
2008, available on SEDAR (www.sedar.com).
Financial Statements (in U.S. dollars).
ART Advanced Research Technologies Inc.
Balance Sheets
(In U.S. dollars)
(unaudited)
-------------------------------------------------------------------
-------------------------------------------------------------------
December 31, December 31,
2008 2007
-------------------------------------------------------------------
ASSETS
Current assets
Cash $1,446,086 $561,325
Term deposits, 0.67%, maturing in January
2009 (2007 - 4.05% maturing in
January 2008) 1,700,000 3,026,329
Accounts receivable 1,700,365 1,768,146
Investment tax credits receivable 779,682 1,558,709
Inventories 1,168,702 1,510,499
Prepaid expenses 547,127 260,199
-------------------------------------------------------------------
7,341,962 8,685,207
Property, equipment and assets under
capital leases 415,932 551,210
Patents 1,462,918 2,135,855
Deferred development costs 2,383,180 1,268,438
-------------------------------------------------------------------
$11,603,992 $12,640,710
-------------------------------------------------------------------
-------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank loan $489,956 $605,266
Accounts payable and accrued liabilities 2,224,509 2,652,219
Deferred revenues 112,926 156,167
Deferred grant - 152,305
Current portion of obligations under
capital leases 35,267 -
------------------------------------------------------------------
2,862,658 3,565,957
Obligations under capital leases 39,271 -
------------------------------------------------------------------
2,901,929 3,565,957
SHAREHOLDERS' EQUITY
Share capital and share purchase warrants 39,142,553 32,217,942
Contributed surplus 4,845,266 4,537,336
Deficit (36,410,691)(31,007,264)
Accumulated other comprehensive income 1,124,935 3,326,739
------------------------------------------------------------------
(35,285,756)(27,680,525)
------------------------------------------------------------------
8,702,063 9,074,753
------------------------------------------------------------------
$11,603,992 $12,640,710
------------------------------------------------------------------
------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Operations
(In U.S. dollars)
(unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods ended Twelve-month periods ended
December 31 December 31
2008 2007 2008 2007
--------------------------------------------------------------------------
Sales
Products $1,061,500 $1,359,321 $3,526,325 $2,063,227
Services and
other revenues 84,182 24,693 1,428,503 24,693
--------------------------------------------------------------------------
1,145,682 1,384,014 4,954,828 2,087,920
--------------------------------------------------------------------------
Cost of sales
Products 398,560 602,034 1,323,140 915,347
Services and
other revenues 19,514 14,103 87,665 14,103
--------------------------------------------------------------------------
418,074 616,137 1,410,805 929,450
--------------------------------------------------------------------------
Gross margin 727,608 767,877 3,544,023 1,158,470
--------------------------------------------------------------------------
Operating expenses
Research and
development, net
of investment
tax credits 594,040 734,287 2,704,682 4,724,842
Selling, general
and
administrative 1,261,085 1,339,559 5,536,464 5,045,825
Amortization 247,423 400,317 828,583 660,306
--------------------------------------------------------------------------
2,102,548 2,474,163 9,069,729 10,430,973
--------------------------------------------------------------------------
Operating loss 1,374,940 1,706,286 5,525,706 9,272,503
Financial expenses
(revenues) (482,325) (22,693) (706,476) 162,249
--------------------------------------------------------------------------
Loss from operations
before income taxes 892,615 1,683,593 4,819,230 9,434,752
Current income taxes
(Recovery) - - - (811,305)
--------------------------------------------------------------------------
Net loss $892,615 $1,683,593 $4,819,230 $8,623,447
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted
net loss (income)
per share $0.01 $0.02 $0.05 $0.13
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and diluted
weighted average
number of common
shares outstanding 94,540,592 75,179,179 94,540,592 63,967,183
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Number of common
shares outstanding,
end of period 94,540,592 94,540,592 94,540,592 94,540,592
--------------------------------------------------------------------------
--------------------------------------------------------------------------
ART Advanced Research Technologies Inc.
Cash Flows
(In U.S. dollars)
(unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Three-month periods ended Twelve-month periods ended
December 31 December 31
2008 2007 2008 2007
--------------------------------------------------------------------------
OPERATING ACTIVITIES
Net loss $(892,615) $(1,683,593) $(4,819,230) $(8,623,447)
Items not affecting
cash
Amortization 247,423 400,317 828,583 660,306
Stock-based
compensation (27,175) 42,834 84,065 172,242
Deferred share units 48,476 - 48,476 -
Gain on disposal of
fixed assets - (27,542)
Net changes in working
capital items
Accounts receivable 296,347 (860,155) (372,831) (1,010,929)
Investment tax
credits receivable (127,108) (640,106) 621,530 (1,101,184)
Inventories (60) 488,399 57,746 508,265
Prepaid expenses 160,252 56,094 (443,651) 126,797
Accounts payable and
accrued
liabilities (246,094) 240,002 119,831 (935,991)
Deferred revenues 17,391 157,678 (17,457) 157,678
Deferred grant (129,340) - (123,519) -
Income taxes
payable - - - (811,304)
--------------------------------------------------------------------------
Cash flows from
operating activities (652,503) (1,798,530) (4,043,999) (10,857,567)
--------------------------------------------------------------------------
INVESTING ACTIVITIES
Short-term
investments - 1,118,039 - -
Proceed on disposal
of property and
equipement 72,486
Acquisition of
property and
equipment (8,330) (12,323) (33,300) (125,104)
Patents (27,588) (192,320) (186,897) (192,320)
Deferred development
costs (508,825) (332,234) (1,743,972) (825,869)
--------------------------------------------------------------------------
Cash flows from
investing activities (544,743) 581,162 (1,891,683) (1,143,293)
--------------------------------------------------------------------------
FINANCING ACTIVITIES
Bank loan - - - 546,398
Repayment of
obligations under
capital leases (8,531) - (36,287) -
Issue of convertible
preferred shares - - 7,100,000 -
Common shares and share
purchase warrants - 4,982,561 - 8,870,545
Equity issue expenses - (940,771) (584,197) (1,136,174)
--------------------------------------------------------------------------
Cash flows from
financing activities (8,531) 4,041,790 6,479,516 8,280,769
Effect of foreign
currency translation
adjustments on cash
and cash equivalents (667,084) 68,626 (985,402) 760,809
--------------------------------------------------------------------------
(675,615) 4,110,416 5,494,114 9,041,578
--------------------------------------------------------------------------
Net decrease in cash
and cash
equivalents (1,872,861) 2,893,048 (441,568) (2,959,282)
Cash and cash
equivalents,
beginning of period 5,018,947 694,606 3,587,654 6,546,936
--------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $3,146,086 $3,587,654 $3,146,086 $3,587,654
--------------------------------------------------------------------------
--------------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS
Cash $1,446,086 $561,325 $1,446,086 $561,325
Term deposit 1,700,000 3,026,329 1,700,000 3,026,329
--------------------------------------------------------------------------
$3,146,086 $3,587,654 $3,146,086 $3,587,654
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Supplemental
disclosure of
cash flow
information
Interest paid 10,902 13,320 57,031 57,512
Interest received $14,819 $36,160 $66,480 $129,504
Contacts: ART Advanced Research Technologies Inc. Jacques Bedard
Chief Financial Officer 514-832-0777 jbedard@art.ca www.art.ca
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